Although the PMI is positive, it's the lowest in a year; in the last quarter of 2017 the PMI surged by 1,3%. A figure above 50 indicates expansion on the index, which is used by the Bank of England to monitor the health of the economy.
The Netherlands, Germany and Austria were the strongest performers overall. The weakest increases were signalled in France and Ireland.
According to the report, the rise in output was mainly linked to higher new orders. New orders have also very strong so far in 2018, suggesting that some manufacturers will need more investment and/or employment in order to meet future growth in demand.
"The survey data in March shows a slight improvement in the manufacturing sector and production and new orders are growing at a slower pace", said IHS Markit associate economist, Sian Jones. In some Northern nations, this was partly driven by bad weather. In fact, we think manufacturing growth in Malaysia will continue to hold up in the 1H18 as the IPI (Industrial Production Index) numbers for January went up 3%. "The main concern at present is overstretched supply chains, as highlighted by another steep lengthening of delivery times for raw materials and semi-manufactured inputs".More news: British royals go to Easter service without Harry and Meghan Markle
The trend was especially noticeable in the Netherlands and Germany, both of which saw record lengthening in vendor lead times. Given the current market environment, it would appear that the coming March US Nonfarm Payrolls report (and knock-on effects to Fed funds rate pricing) would not be the catalyst to drive such price action; instead, a further tightening of financial conditions and erosion in risk sentiment would be necessary. Companies reacted to the sustained pressure on their capacity by raising employment. However, the pace of job creation softened since February and was marginal.
In February, factories had raised prices at their fastest pace in almost seven years.
Additionally, although a weakened Pound has improved conditions for exporters of United Kingdom manufacturing goods, it could also be having a constraining effect on United Kingdom consumers who are having to cope with higher prices.